Hong Kong has taken a hard stance against unlicensed cryptocurrency exchanges, issuing a directive for immediate shutdowns. The Securities and Futures Commission (SFC) of Hong Kong has disclosed that eleven platforms, including HKbitEX, PantherTrade, Accumulus, DFX Labs, Bixincom, xWhale, YAX, Bullish, Crypto.com, WhaleFin, and Matrixport HK, are now deemed-to-be-licensed applicants. 

Only Crypto.com has secured approval out of the well-known offshore exchanges, while others like OKX, Bybit, Gate, HTX, and Binance have withdrawn. Hong Kong’s regulators have been clear: Cryptocurrency exchanges must either apply for a license by February 29 or cease operations within three months to minimize risks for investors. 

The pressure was on, and over 22 cryptocurrency exchanges stepped up, applying for licenses to continue their regional operations. However, many of these exchanges backed out as the deadline approached, opting to withdraw their applications.

Gate.HK, based in Hong Kong, did provide some insight, citing the need for a “major overhaul” of its trading platform to meet Hong Kong’s strict regulatory requirements.

Several other applicants shared their challenges with renowned blockchain reporter Colin Wu. They revealed that the SFC demanded license applicants promise not to develop mainland Chinese users anywhere in the world. This requirement proved to be a deal-breaker for them.

The new licensing system for virtual asset trading platforms (VATP), crafted by the China Securities Regulatory Commission, took effect today. The system’s transitional arrangements allowed operators to apply for a license and comply with the new regulatory requirements from June 1. 

This meant they could continue providing virtual asset services in Hong Kong until the authorities made a final decision on their license applications.

“A Hong Kong legislator criticized the fact that the current applicants are very small and that Hong Kong cannot retreat to the safety line from the beginning and hopes to promote so-called innovation with completely zero risk,” said Colin Wu.